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Pushback

Rejecting such causality and claiming a deck stacked against it, the ethanol industry jumped into the fray early. As an indication of how volatile the “fuel-versus-food” tussle has become, advocacy group releases/statements began arriving even before the hearing.

“America’s ethanol producers are on pace to produce nearly 40 million metric tons of livestock feed in 2011 – a volume greater than all the corn used on cattle feedlots all across the country,” said a Renewable Fuels Association (RFA) release. “Additionally, ethanol producers are poised to export nearly 25 percent of that volume to meet growing feed demands around the globe.”

The RFA pointed out that the six-member panel included “a wide range of livestock and meat processing interests, but do not include anyone from the nation’s ethanol, corn growing, or feed milling industries.”

The panel make-up “demonstrates the predetermined outcome of this hearing,” said Bob Dineen, RFA President. “America needs thoughtful energy and agricultural policy that is based on all the available facts, not just those some lawmakers choose to hear.

“If this subcommittee were truly interested in finding out the facts, they would be interested to know that ethanol producers will provide nearly 40 million metric tons of livestock feed this year. They would also be interested to note that at today’s corn prices, a pound of pork chops retailing for $3.51 per pound contains just 30 cents of corn – less than eight percent of the total cost. Similarly, the farm share of each retail food dollar is less than 16 cents. Additionally, members of the committee may also be interested to know that many of the nation’s largest integrated livestock and meat manufacturers are enjoying strong quarterly profits despite the abnormally high price of corn. Facts matter and we hope that the members of the committee will take a comprehensive look at the issue rather than taking the word of industries seeking to return to days of subsidized corn production.”

The ethanol industry has been joined by the Obama administration in rejecting claims that the fuel is responsible for higher feed costs. During a tour of Iowa last spring, Agriculture Secretary Tom Vilsack said, “Ethanol production (doesn’t have) a significant impact and effect on food prices. There’s a misconception in the public that ethanol is driving up food prices. That isn’t the case. In 2008, the last time we had an increase in food prices, we saw ethanol responsible for about 10 percent of the overall increase – a very small percentage.”

Iowa Rep. Leonard Boswell said as a corn-grower and cattle owner he was “on both sides of the issue.” Still, he wouldn’t blame ethanol as the leading factor in feed costs and challenged the panel’s conclusions. “What data leads you to claim high (feed) prices are directly tied to ethanol consumption and not market speculation?”

Ted Seger, President of Indiana’s Farbest Foods, took up the challenge. “I’d say it’s tied to both market speculation and ethanol. I think you can draw that conclusion … when corn was $2 or $2.50 for 20 years, or so. … We introduced the ethanol program in 2006 and took that $2.50 corn to, last year, $4 and it’s now at $6 or $7. If you do the math on that, it’s effectively a $60 billion cost to the public for this coming year…

“The speculator has jumped onto the ethanol program now that corn is part of the energy process. He’s in there playing.”

Boswell was unmoved. “I respect you being here and we need to have this dialogue. But, with the facts before us, I’m not convinced ethanol is cause of this. I think there are many, many other factors. This process will probably bring those out and give us a chance to decide what we need to do.”